How can blockchain improve your hiring processes?

The first blog in this series introduced the basics of Distributed Ledger Technology (DLT), widely known as blockchain, and what effects it can have in the payroll domain. The second one focused on blockchain’s potential to safeguard personal data (PII) and how information can be exchanged between employer and employee. This blog will look at the role DLT can play in recruitment, from an employer’s and candidate perspective.

Candidate screening is vital

When a company raises a vacancy, it means they need a person to perform a job. Sometimes they are looking to hire a permanent, salaried employee and other times they need someone to perform a specific task against a set payment, also called a “gig”. It would be advantageous for everyone if the right candidate is identified very quickly, so steps can be taken to onboard a qualified person and move her into the role. In real life, the recruitment process is seldom short and simple. Even if you hire a “gig-worker”, as employer, there are (legal) obligations to fulfill. Sourcing, vetting, selecting and onboarding the right permanent worker are time- and labor-intensive tasks.

Many people have a profile on LinkedIn that holds career data, and typically is the one place that is updated frequently as people move through the ranks. Considering it’s a public forum, you would assume that the information is truthful. Unfortunately, we’ve all read the stories about educations that turned out to be not quite finished with a diploma, creative use of titles, and accomplishments that were not exactly as people described. There are even infographics listing the Top10 lies that people put on their resumes, so it’s more common than assumed. When presenting themselves on a job site, candidates paint a shiny picture, and the positive references makes you believe that no one has ever done a bad job.

That is one of the reasons candidate screening exist. Before you contract the employee and enter into a relationship, as employer you must verify that the candidate is who she says she is and that she actually has the qualifications and certifications that are listed on her resume. Vetting candidates is one of the most time-consuming tasks in recruiting — and it can be difficult to verify information: if you need to go back more than 15 years, chances are there are no digital records available to easily check a university degree.

What if there was a faster way to identify suitable candidates and make sure they have the qualifications and references they claim to have?

Blockchain enables candidate verification

Remember that DLT provides the means to store information and keep a record of that transaction in a ledger. Once the transaction completes, a block is added to chain, and that chain can’t be altered retro-actively. All nodes on the network participate in verification and synchronization, making it virtually impossible to tamper with.

From an HR perspective, DLT can be used for verification purposes, not only for identity (read for more on that in the second blog) but also for career information like qualifications, work history and references. Early adopters can be found in educational institutions, who are starting to issue degrees and certifications on blockchain. And because blockchain is a distributed ledger and provides a historic record, an employer can easily verify the validity of underlying certifications, even if the school or university ceased to exist or a company went bankrupt and employment records are no longer available.

Instead of mailing your resume to a future employer, a worker can use their “cv wallet” to allow an employer easy access to verified job performance and proof of work records. For employers, if verification can be completed faster, with more ease and cheaper, it becomes increasingly viable to add workers to the workforce on a non-permanent base. You don’t need to run through a lengthy reference check, if the worker can provide verified career information on DLT, you can be assured the information is accurate and secure.

Smart contracts

Blockchain also introduces other advantages to the recruitment process, eg regarding contracts and performance-related pay. When you put the contractual agreement with the worker in a ‘smart contract’, that contract can be stored on blockchain with the payment being held in escrow. A smart contract stipulates that when a certain condition is met, the money is released and thus provides security to the worker. The requirements are transparent to all concerned: the circumstances to be fulfilled, when they are getting paid, and what amount.

When the worker delivers the result, the payment is automatically and immediately released. If the contract is not fulfilled, or the diploma not submitted, the transaction will not take place. A smart contract can also govern other agreements between employers and employees, eg when an employee finishes her education with a diploma, her salary increase is applied in the next salary run.

New ways of hiring

Fast hiring using centralized verification – blockchain will allow employers to quickly establish an employee’s identity and eligibility for work. You don’t need a third party to verify documents. If a diploma or ID was tampered with, the distributed ledger will clearly show that the data is not in sync, and establish proof of falsification. If the employee already holds specific certifications, they can be quickly verified. The onboarding process will become more digital and less document centric – instead of submitting copies, the employer can check the future employee’s ledger to validate eligibility for work.

Digital work trail – sometimes an employee takes time off in between jobs and does not want to disclose that. They mask these gaps by lengthening service time instead of being open about it. When work records are stored using DLT, they provide a secure and verified trail of the employee’s career, including positions held. A career gap is not necessarily bad, but not disclosing it does not work in the employees’ favor when it’s discovered. A digital work trail provides assurance from prior employers that the employee worked before, where and in what role, giving the new employer a comprehensive view.

Work flexibility – while employers will undoubtedly rely on their permanent workforce in the foreseeable future, if they need to augment staff during certain periods or for special projects, smart contracts allow for more flexibility in the workforce, as well as paying for performance. A company becomes less dependent on when and where people work as long as they deliver the agreed results.

Trust

Technologies that are based on distributed ledgers in essence establish trust. Trust that the employee says who she claims she is, that she has the right qualifications for the job. Trust works both ways: it also assures the employee that the contract is valid and that she will get paid correctly and timely for a job well done. The recruitment or hiring process has many options to benefit and improve from blockchain applications. NGA is committed to support that change and enabling the future of work.

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Malcolm Bennett

Malcolm Bennett has been NGA Human Resources Group Counsel and Company Secretary since January 2015. He was previously Associate General Counsel for over 13 years with IBM and previously held legal positions with CMS Cameron McKenna and BHP Billiton prior to that.

Malcolm has experience in managing teams/departments and structuring and negotiating complex commercial transactions in multiple jurisdictions – he now leads a small team of legal, compliance and security professionals for NGA HR across the globe.

He studied Law at the University of Cape Town and now resides in Manchester with wife and son.

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